Philippines president punts fiscal restraint

Category: World News

Date Added: 27 July 2010

FRANCISCO ALCUAZ

and CLARISSA BATINO

MANILA

PHILIPPINES President Benigno Aquino yesterday backed a “fiscal responsibility” bill to narrow the budget deficit and touted privately funded roads and railways as a way to free funds for social services.

In his first state of the nation address before congress in Manila since winning the presidential elections in May, he also gave a withering critique of his predecessor, Gloria Arroyo, citing poor management of state institutions and infrastructure, and several illegal deals signed in the last months of her term in office.

The fiscal responsibility bill would prohibit new spending that was not supported by revenue, Mr Aquino said. Investors had offered to build a highway from Manila to the northeast and to lease two navy properties for $100m, he said.

“However much we lack to pay for our needs, I’m still encouraged because many are showing renewed interest and confidence in the Philippines,” Mr Aquino said. “This will be the solution: public private partnerships. The many talks on these will bear good fruit. Once these public-private partnerships are in place, we can fund social services.”

Mr Aquino, who took office on June 30, needs to tap investors as the budget deficit heads for a projected record 325 billion pesos (7bn) this year, or 3,9% of gross domestic product. He is targeting 2% by 2013 while boosting spending on education, healthcare, tourism and security and sticking to a pledge not to raise taxes.

Boosting public investments in infrastructure “is one of the most important items and you’re going to need the tax base to do that”, said Edwin Gutierrez, who manages about $5bn of emerging market debt at Aberdeen Asset Management in London.

“That’s what condemns the Philippines to growth that is lower than the rest of Asia. The private sector can help.”

Mr Aquino said he also supported an antimonopoly law to help small businesses flourish.

On the administrative front, Mr Aquino said he had encouraged investment by cutting the time for registering a business to 15 minutes from multiple visits of up to eight hours. He would cut required documents to six from 30 and the application form to one page from eight.

He warned that the fund for emergencies such as typhoons and floods was practically empty.

Looking to the future and the key policies he wanted to implement in his six year term, he highlighted:

na truth commission to investigate claims of corruption;

na campaign to stop extrajudicial killings; and

naffordable healthcare and education.

Mr Aquino delivered the speech at the opening of the legislative year.

The senate elected as its leader Juan Ponce Enrile, an ally of former president Joseph Estrada, the number two candidate in the May presidential election. Mr Aquino’s ally, Francis Pangilinan, quit the race on Sunday.

Mr Aquino, who beat Mr Estrada by 16 percentage points, “clearly had a popular mandate”, Mr Gutierrez said. Still, he needed to build support for when “horse trading” ensued. “He does have to make

Source: Business Day